Even Warren Buffett shops at Wal-Mart
Berkshire Hathaway's 13-F filing shows that Warren Buffett loaded up on Wal-Mart stock. What does the Oracle of Omaha know?
I knew he was frugal, but does the second-richest man in America really need to shop at Wal-Mart (WMT)?
Well, when your cart can accommodate 37.8 million WMT shares, I can begin to understand Buffett’s need to do a little bargain shopping.
Is Buffett Playing It Safe with Wal-Mart?
And Buffett has been really loading up his cart. That 37.8 million shares as of September 30, 2009 is a big increase from the 19.9 million shares Buffett’s firm Berkshire Hathaway (BRK-A) owned last quarter.
The increase in Buffett’s WMT holdings is telling, as it indicates that he sees value in the retail giant for the long term. Buffett is known for finding value and sticking with that value until it makes him huge profits.
Now, I’ve written a lot in the past about how I love Wal-Mart, not simply because it's a great company with a solid stock outlook, but because I think Wal-Mart is a "paragon of virtue” that creates a tremendous amount of jobs -- more jobs than any silly federal stimulus program could ever hope to create. Wal-Mart’s virtue also comes from the fact that the company saves American families thousands of dollars each year due to their low-priced merchandise.
I’ve also written about how individual investors shouldn’t necessarily follow Warren Buffett’s picks, as the "Oracle of Omaha" has a lot more time and capital to wait-out a downturn than the average investor trying to pump up his or her retirement account.
This time, however, I think Buffett’s additional WMT purchases should be read as a buy recommendation for individual investors. The fact is Wal-Mart is an extremely well-run company, and it continues to sell a whole lot of merchandise, while also managing to streamline costs.
And though the company gave a not-so-cheery holiday sales forecast, that forecast has much more to do with current economic conditions than internal problems at Wal-Mart stores.
I think the news that Buffett is bullish on WMT is great news, not only for Wal-Mart-lovers like me, but for investors who want to own a great company that will likely continue delivering profits to shareholders for many years to come.
NOTE: At the time of this writing, Jim Woods did not own WMT shares.
- Grading Warren Buffett's Portfolio
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- Do You Really Want to Invest Like Buffett?
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The solid report comes a month after the retailer closed all of its Canadian operations.
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